Bettergrow Pty Limited v NSW Electricity Networks Operations Pty Ltd as trustee for NSW Electricity Networks Operations Trust t/as TransGrid (No 2)

[2018] NSWSC 514

Supreme Court

New South Wales

Medium Neutral Citation:	Bettergrow Pty Limited v NSW Electricity Networks Operations Pty Ltd as trustee for NSW Electricity Networks Operations Trust t/as TransGrid (No 2) [2018] NSWSC 514
Hearing dates:	19 to 23, 26 and 28 to 29 March 2018
Decision date:	26 April 2018
Before:	Ball J
Decision:	(1)   The proceedings be dismissed; (2)   The plaintiff pay the costs of the first, second and fourth defendants; (3)   The first cross-claim cross-summons filed by the second defendant on 17 February 2017 be dismissed; (4)   The second cross-claim cross-summons filed by the first defendant on 20 February 2017 be dismissed; (5)   There be no order for costs in relation to the cross-claims; and (6)   The parties have liberty to apply to vary orders (2) and (5) within 14 days of the date of this judgment.
Catchwords:	TORTS – Negligence – Liability for others’ negligence – Non-delegable duties of care TORTS – Negligence – Essentials of action for negligence – Duty of care – Definition of “physical damage to property” – Reasonable foreseeability of physical damage to property in recognised classes of case – Determination of existence of duty of care in novel cases – Whether a principal owes a duty of care to supervise its contractors and subcontractors – Breach of duty of care – Causation under Civil Liability Act 2002 (NSW) s 5D CONTRACTS – Implied terms – Terms implied in law – Terms implied in fact – Necessary to give business efficacy – Breach of contract CIVIL PROCEDURE – Pleadings – Amendment – Court’s discretion to refuse application for amendment made after commencement of hearing TORTS – Negligence – Essentials of action for negligence – Duty of care – Whether a supplier of goods pursuant to a contract owes a duty of care to protect against economic loss arising from defects – Breach of duty of care TORTS – Defences – Apportionment of responsibility and damages under Civil Liability Act 2002 (NSW) s 35 TORTS – Defences – Contributory negligence under Civil Liability Act 2002 (NSW) s 5R – Reasonableness of plaintiff’s assumption of counterparties’ compliance with their legal obligations CIVIL PROCEDURE – Cross-claims – Court’s discretion to refuse leave to file cross-claim after commencement of hearing
Legislation Cited:	Civil Liability Act 2002 (NSW) Protection of the Environment Operations Act 1997 (NSW) Protection of the Environment Operations (Waste) Regulation 2014 Work Health and Safety Act 2011 (NSW) Work Health and Safety Regulation 2011
Cases Cited:	Armes v Nottinghamshire County Council [2017] UKSC 60 Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6 Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18 at [79] Bryan v Maloney (1995) 182 CLR 609; [1995] HCA 17 Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520; [1994] HCA 13 Byrne v Australian Airlines Ltd (1995) 185 CLR 410; [1995] HCA 24 Caltex Refineries (Qld) Pty Limited v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 Garzo v Liverpool / Campbelltown Christian School [2012] NSWCA 151 Hawkins v Clayton (1988) 164 CLR 539 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Kondis v State Transport Authority (1984) 154 CLR 672; [1984] HCA 61 Leichhardt Municipal Council v Montgomery (2007) 230 CLR 22; [2007] HCA 6 Leighton Contractors Pty Ltd v Fox (2009) 240 CLR 1; [2009] HCA 35 Roads and Traffic Authority of NSW v Dederer (2007) 234 CLR 330; [2007] HCA 42 Rylands v Fletcher (1866) LR 1 Exch 265; affd (1868) LR3HL 330 Smith v Leurs (1945) 70 CLR 256 Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16; [1986] HCA 1 Sydney Water v Asset Geotechnical Engineering [2013] NSWSC 1274 Transfield Constructions Pty Ltd v GIO Australia Holdings Pty Ltd [1996] NSWCA 538 Transfield Services (Australia) Pty Ltd v Hall (2008) 75 NSWLR 12; [2008] NSWCA 294 Woodland v Essex County Council [2014] AC 537; [2013] UKSC 66
Texts Cited:	R P Balkin and J L R Davis, Law of Torts, (5th ed, 2013, LexisNexis)
Category:	Principal judgment
Parties:	Bettergrow Pty Limited (Plaintiff) NSW Electricity Networks Operations Pty Ltd as trustee for NSW Electricity Networks Operations Trust t/as TransGrid (First Defendant) Powercor Network Services Pty Ltd (Second Defendant) TTR Construction & Excavation Pty Limited (In Liquidation) (Third Defendant) On-Line Pipe & Cable Locating Pty Limited (Fourth Defendant)
Representation:	Counsel: D Weinberger (Plaintiff) D Priestley SC (First Defendant) A Shearer (Second Defendant) P Newton with M Foley (Fourth Defendant)   Solicitors: Rockliffs Solicitors & IP Lawyers (Plaintiff) Meridian Lawyers (First Defendant) Marque Lawyers (Second Defendant) Kells The Lawyers (Third Defendants) Chambers Russell (Fourth Defendants)
File Number(s):	2016/322249
Publication restriction:	None

Judgment

Introduction

1. In these proceedings, the plaintiff, Bettergrow, claims damages from the defendants for losses suffered by it as a result of the delivery of excavation waste contaminated with asbestos to a drill mud processing facility owned and operated by it in Vineyard in New South Wales. The facility was not licensed to receive waste containing asbestos and as a result it had to be closed for a period of approximately seven weeks while the waste was removed and the facility decontaminated. Bettergrow claims the costs of removal and decontamination together with lost profits. During the hearing, it was agreed between the parties that Bettergrow’s losses total $1,500,000 (inclusive of interest).

2. The waste was delivered to Bettergrow’s facility by the fourth defendant, OnLine Pipe & Cable Locating Pty Limited (Online), which had been engaged by the third defendant, TTR Construction & Excavation Pty Limited (TTR), to carry out non-destructive digging (NDD) work in connection with the second stage of the refurbishment of the Beaconsfield West Electrical Substation and to dispose of the resulting waste. It was that waste that was contaminated with asbestos. The substation is owned by the first defendant, TransGrid. It had engaged the second defendant, Powercor Network Services Pty Ltd (Powercor), to undertake the refurbishment work. Powercor subcontracted the civil works to TTR. TTR is now in liquidation and did not participate in the hearing. TTR, in turn, engaged Online to carry out the work that it did.

3. Bettergrow advances a claim in negligence against each of the active defendants. It also advances a case that TransGrid owed a non-delegable duty of care to Bettergrow, with the result that it is liable for the negligence of Powercor, TTR and Online. Finally, Bettergrow advances a claim in contract against Online.

4. TransGrid and Powercor deny that they owed any duty of care to Bettergrow and deny that, if they did, they breached it. Online does not admit that it owed a duty of care and denies that it breached it or the terms of any contract between it and Bettergrow. Each of the active defendants also contends that Bettergrow’s claim (whether in negligence or in contract) is an apportionable one under Part 4 of the Civil Liability Act 2002 (NSW) (the CLA) and seeks to apportion responsibility to the other defendants (including TTR). In addition, TransGrid relies on a defence of contributory negligence. There are also cross-claims between TransGrid and Powercor in which each seeks indemnity from the other. However, during the course of final submissions, it was agreed to postpone consideration of those cross-claims until judgment was delivered by the Court in relation to Bettergrow’s claim.

5. Finally, on the fifth day of the hearing, Online sought leave to file a third cross-claim seeking, among other things, damages against TransGrid and Powercor for negligence in the event that the contractual claim against it succeeded. I refused that leave and said that to the extent necessary I would give reasons in this judgment.

Background

6. The Beaconsfield substation is located at 44-62 Burrows Road, Beaconsfield West and covers an area of approximately 8,600 square metres. In or around September 2014, TransGrid sought tenders from contractors for the second stage of the refurbishment of the substation to update and to replace existing buildings and machinery to ensure a reliable energy supply.

7. The tender documents recorded in various places that asbestos was present on the site, and the presence of asbestos was also referred to in various environmental and contamination reports that formed part of the tender documents. In particular, included in the tender documents were three reports prepared by Aargus Pty Ltd, which had been appointed by TransGrid in August and October 2009 to conduct an environmental assessment of the site. As part of its report dealing with the area covered by 48-62 Burrows Road, Aargus drilled 16 boreholes to obtain soil samples. Testing of those samples revealed the presence of asbestos in 8 of the 16 boreholes. The tests indicated that asbestos was present mainly in the northern part of the site, some distance from where the NDD work occurred.

8. The Aargus reports identified various remedial options for the land. Those that involved partial excavation of the site recommended further sampling and analysis to determine the size of each area affected by asbestos and consequently, the final waste classification of the waste to be removed from particular areas of the site.

9. TransGrid required its contractors to prepare a Construction Environmental Management Plan (CEMP) to manage the environmental aspects of the works that they were contracted to perform. To assist contractors to do so, it prepared a Management System Document, which, among other things, set out the information to be contained in a CEMP. TransGrid also prepared a Review of Environmental Factors dated September 2014, which, among other things, identified the environmental risks present at the site (including asbestos), specified how those risks would be managed during the refurbishment of the substation and set out the relevant statutory requirements.

10. The removal and disposal of asbestos contaminated material is highly regulated. Of particular relevance are Chapter 8 of the Work Health and Safety Regulation 2011 (the WHS Regulation) made under the Work Health and Safety Act 2011 (NSW) (the WHS Act); the Protection of the Environment Operations Act 1997 (NSW) (the PEO Act); and the Protection of the Environment Operations (Waste) Regulation 2014 (the Waste Regulation) made under that Act.

11. Part 8.3 of the WHS Regulation deals with the management of asbestos and associated risks. Clause 424 requires a person with management or control of a workplace to indicate clearly the presence and location of asbestos. Clause 429 requires a person with management or control of a workplace to prepare a written asbestos management plan (AMP). Part 8.5 deals with asbestos at the workplace. Clause 445 imposes a duty on a person conducting a business which may involve the removal of asbestos or carrying out asbestos-related work to provide training in the identification, safe handling of and suitable control measures for asbestos. Clause 446 provides that a person conducting the business or undertaking must not use, or direct or allow a worker to use, high pressure water spray on asbestos. Part 8.7 deals with asbestos removal work. Clause 458 requires a person conducting a business or undertaking that commissions the removal of asbestos to ensure that the asbestos removal work is carried out by a licensed asbestos removalist who is licensed to carry out the work. The regulations provide for two types of licence. A Class A licence governs the removal of all types of asbestos including friable asbestos. Friable asbestos is asbestos which can be easily reduced to powder. A Class B licence only entitles a person holding the licence to remove non-friable asbestos. A licence is not required for the removal of 10 square metres or less of non-friable asbestos.

12. Various obligations are placed on a licensed asbestos removalist, including an obligation to train workers who carry out licensed asbestos removal work (cl 460), an obligation to ensure that a nominated asbestos removal supervisor is on site (if the removal work requires a Class A licence) or is readily available to a worker (if the removal work requires a Class B licence) (cl 459), an obligation to prepare an asbestos removal control plan (cl 464), an obligation to give written notice to the regulator at least five days before asbestos removal work commences (cl 466) and an obligation to ensure that asbestos waste is disposed of as soon as practicable at a site authorised to accept asbestos waste (cl 472).

13. Under s 274 of the WHS Act, the Minister may approve a code of practice for the purpose of the Act and codes of practice are admissible as evidence of whether or not a duty or obligation imposed by the Act has been complied with. There are approved codes of practice in relation to the management of asbestos. They were referred to during the course of the hearing, but as will become apparent, nothing in this case turns on their contents.

14. Under s 143 of the PEO Act, a person who transports waste to a place that cannot lawfully be used as a waste facility for that waste or causes or permits waste to be so transported is guilty of an offence, as is the owner of the waste. The owner has a defence if it did not transport the waste and establishes that the offence was due to causes over which it had no control and it took reasonable precautions and exercised due diligence to prevent the commission of the offence: s 143(3). That provision is supplemented by cl 80 of the Waste Regulation which provides that a person disposing of asbestos waste must do so at a landfill site that can lawfully receive the waste.

15. On 5 March 2015, following the successful tender by Powercor, TransGrid and Powercor entered into a contract (Contract 1409) by which TransGrid engaged Powercor to undertake the second stage of the refurbishment work at the Beaconsfield West site. TransGrid’s corporate identity changed during the relevant time as a result of the privatisation of the electricity distribution assets that it now owns. Nothing, however, turns on that change of identity and it is convenient to refer to TransGrid as it is now as the entity that at all relevant times owned the assets and had the rights and obligations which are relevant to the resolution of the issues in this case.

16. Contract 1409 comprised a number of documents including a detailed technical specification which formed part of the tender (the Specification) and the General Conditions of Contract (the General Conditions).

17. Clause 1.1.9 k) of the Specification provided:

The contamination studies carried out on the Site indicate that any soil removed from the surrounds of the No.1 and No.2 transformer compounds would be classified as Restricted Solid Waste with Asbestos. The remainder of the Site would be classified as General Solid Waste with Asbestos. The Contractor shall allow for disposal of all materials in accordance with these classifications, the results of the contamination studies in Part 4.4 and the requirements of the REF [Review of Environmental Factors]. …

18. Under cl 4.2 b) of the General Conditions, Powercor warranted that it “Shall engage and retain consultants and subcontractors who are suitably qualified and experienced”.

19. Clause 9.2 of the General Conditions relevantly provided:

The Contractor shall not without the prior written approval of the Principal, which approval shall not be unreasonably withheld, subcontract or allow a subcontractor to assign or subcontract work described in the Annexure A.

With a request for approval the Contractor shall provide to the Principal particulars in writing of the work to be subcontracted and the name and the address of the proposed subcontractor. The Contractor shall provide to the Principal other information, which the Principal reasonably requests, including the proposed subcontractor documents without prices.

…

Annexure A of the General Conditions provided that the work that could not be subcontracted without approval was “Any work under the Contract”.

20. Clause 10 of the General Conditions provided:

CONTRACTOR’S RESPONSIBILITY FOR SAFETY AND THE ENVIRONMENT

The Contractor accepts that as a fundamental obligation of this Contract, the Contractor has promised to plan, design, monitor and supervise, and carry out the construction and commissioning of the Works such as to minimise to the maximum extent practicable the risk of:

a)   personal injury or death of any person employed in any respect relating to the Works or of any member of the public; and

b)   contamination of or detriment to the environment;

and that the Contractor will utilise the best professional advice, care and diligence to achieve that purpose and shall account to the Principal and Superintendent in respect of the same throughout the execution of the Works.

The Contractor shall produce and follow closely a Construction Environmental Management Plan and a Safety Management Plan, which details the primary responsibilities and shall report any deviations or opportunities for improvement against that plan each month as part of the progress reporting.

The Contractor shall, at its own cost, promptly act on any instruction related to the primary responsibilities issued by the Principal and ensure that each subcontractor or supplier to the Contractor promptly and effectively implements any such direction related to the primary responsibilities of the Contractor.

The Contractor shall, as a condition of each subcontract and supply contract, require the subcontractor to agree to corresponding obligations to the Contractor as are contained in this clause.

21. Powercor took possession of the site on 13 July 2015. It prepared a draft of the CEMP in about September 2015. The CEMP included an AMP which had been prepared by Environmental & Natural Resource Solutions (ENRS). The AMP documented the procedures and controls to be adopted for managing asbestos in soil during refurbishment of the site consistently with requirements under the applicable legislation.

22. TransGrid representatives attended fortnightly site progress meetings at which issues of quality, management and work health and safety were discussed. They also regularly attended daily “toolbox” meetings between Powercor and its subcontractors at which the day’s activities were discussed and conducted periodic audits of Powercor’s compliance with Contract 1409, including its compliance with the provisions of the contract relating to the management of asbestos. On at least one occasion, TransGrid issued a Contractor Corrective Action Request following an audit which, according to TransGrid, revealed that Powercor had failed to manage asbestos-related risks in accordance with its contractual obligations.

23. Powercor’s CEMP and AMP went through a number of iterations. The version of the AMP that applied at the time of the events giving rise to this litigation was revision 5, which was issued on 18 March 2016.

24. Paragraph 4.5 of the AMP set out relevant clauses of Contract 1409 relating to asbestos, including the effect of cl 1.1.9 k) of the Specification. Paragraph 6.4 stated that the asbestos removal contractor must hold a licence under the WHS Regulation. Paragraph 12.7 of the AMP relevantly provided:

The transportation and disposal of asbestos contaminated wastes shall be to a landfill licensed to receive asbestos waste and in accordance with the requirements of Section 29 of the Protection of the Environmental Operations (Waste) Regulation 2005.

25. Between 29 February 2016 and 11 March 2016, Mr Martin Joyce, the then project manager of Powercor, exchanged emails with Mr Todd Lindsay, the managing director of TTR, about Powercor engaging TTR to undertake the civil works for the project.

26. On 16 March 2016, Powercor submitted a contractual approval request relating to TTR to TransGrid. That request was approved and, on 21 March 2016, Mr James Doran, who was Powercor’s site manager on the project, sent Mr Lindsay a copy of the AMP. On the same day, Mr Lindsay met Mr Doran to take a tour of the site. At the time, he and a number of other employees of TTR completed Powercor’s online safety induction course, which consisted of a number of electronic pages that a participant clicked through. Some pages contained information about the project and a number consisted of multiple choice questions that had to be answered before the participant could click through to the next screen. One page indicated that an AMP had been developed for the site and would need to be complied with. It also stated:

All asbestos (soil/fill) removal must be conducted by a suitably licensed asbestos removal contractor. Access to the asbestos works area will only be allowed permitted [sic] under the supervision of the licensed contractor and in accordance with the conditions of the Safe Work Procedure outlined in the Asbestos Management Plan.

27. During the visit, Mr Lindsay and Mr Doran also discussed various documents including site plans, the CEMP and the AMP. Mr Doran says that during the visit, he told Mr Lindsay that:

It is really important that you and anyone else who comes on site understands that it is asbestos contaminated. We have had several positive test results for asbestos on site before. Any subcontractors you use need to be licenced [sic] for asbestos and any waste from the site has to be dumped at asbestos licensed facilities. The contamination is a mixture of friable and non-friable asbestos in different areas.

28. On 21 March 2016, Mr Lindsay also received a draft copy of the contract for the works to be conducted by TTR at the site. After discussing the scope of the works with Mr Doran, Mr Lindsay sent an email to Mr Jack Coolledge, Powercor’s procurement and contract specialist, which he copied to Mr Doran. The email said:

It has been identified that asbestos is present and testing needs to be carried out to determine the classification. Your site management and environmental plans stipulate the requirement of an asbestos removal supervisor along with each site worker to have a minimum of asbestos awareness training.

My pricing has not allowed for the management or handling of asbestos nor training of individuals as identified in your management and environmental plans.

We would be able to assist with the rectification of this situation but we would need to review our agreed terms.

I will contact you in the morning to discuss prior as this is not [an] arrangement discussed previous[ly].

29. Following that email, between 21 and 25 March 2016, Mr Lindsay and his son, Mr Ryan Lindsay, who also worked for TTR, attended training in relation to the removal of non-friable asbestos and the supervision of that removal work. None of TTR, Mr Lindsay and his son was licensed by Work Safe Australia as asbestos removal contractors as required by the AMP and the CEMP. The subcontract was revised to include additional charges for an asbestos supervisor, and Powercor was invoiced on that basis.

30. It was a requirement that all subcontractors prepare a Safe Work Method Statement (SWMS). On 21 March 2016, Mr Lindsay commenced drafting an SWMS, which he completed on 23 March 2016 after receiving some comments from Mr Doran. In relation to excavation and asbestos, the SWMS stated:

If suspected ACM has been found, cease work and notify Powercor Project Manager immediately.

Powercor Asbestos Procedure shall be applied.

31. On 24 March 2016, Mr Lindsay sent Mr Barry Maloney, the General Manager and Managing Director of Online, an email requesting a “vac truck” to start NDD on 30 March 2016. There was no mention of the potential for asbestos in that email. NDD is a technique that involves blasting away ground surfaces using high pressure water and vacuum excavation of the drill mud created by the water blasting. The purpose of the NDD work was to identify the location of electricity cables and conduits underground in preparation for excavation work.

32. Online owns a number of trucks which are fitted with high pressure water hoses, vacuums, water tanks and storage tanks for the transportation of drill mud. It is not licensed to carry asbestos contaminated materials. Its workers are not trained to handle asbestos and they are not provided with masks and other clothing to protect them from asbestos contamination. Online’s trucks are not fitted to carry asbestos waste or to separate and seal off asbestos waste from other materials.

33. At the same time that TTR arranged for the NDD work, Mr Doran also contacted ENRS to take further samples from the NDD potholes to test for asbestos.

34. On 29 March 2016, Mr Glenn Johnstone, the Senior Works Advisor of Online, sent a number of documents to Mr Lindsay in relation to the NDD work. There was no suggestion in that material that Online had the capacity to handle or to dispose of asbestos waste. Both Mr Maloney and Mr Johnstone say that they were not told that the job involved the removal of asbestos.

35. On 29 March 2016, Powercor and TTR entered into a contract by which TTR agreed to undertake the civil works for the project. At about the same time, Mr Doran says that he had a conversation with Mr Lindsay to the following effect:

Mr Lindsay:   I’ve engaged a company to do NDD for service location on site tomorrow using a vacuum truck.

Mr Doran:   Thank you. Do not forget that any work like NDD on site needs to be by someone who is licensed to transport asbestos waste and can dump the waste at a licensed facility.

Mr Lindsay:    Yes I have ensured everyone is licensed. I have used this NDD company before and they are good at their work.

Mr Doran:   There aren’t many licensed facilities that can take asbestos. I know there’s a SITA at Kemps Creek because our previous subcontractor has used it before when we’ve had waste from the site. You should also ensure that the NDD truck drivers wear P2 equipment for asbestos protection. Make sure they have P2 masks and white suits when they are doing the works.

Mr Lindsay:   Ok.

36. On 30 March 2016, Mr John Catlin with Mr Jay Vial, who were both employees of Online, drove one of Online’s trucks to the Beaconsfield West site. They had received instructions to attend the site by text message the previous day. They arrived at approximately 7.00am. Prior to attending the site, Mr Catlin had been given Mr Lindsay’s telephone number. On arrival, he telephoned Mr Lindsay and a short time later Mr Lindsay met him and Mr Vial at the entrance gate. The evidence is that there was a sign on the entrance gate warning that there was asbestos on site, although Mr Catlin says that he did not notice it. Mr Catlin was told by Mr Lindsay that before they started they must do an induction course. They parked the truck inside the gateway and attended the site office.

37. Both Mr Catlin and Mr Vial signed a Job Safety Environmental Analysis (JSEA) prepared by Powercor. The JSEA described the work activities as “Pothole, NDD, sampling, delineation of work areas”. Under the heading “High Risk Construction Tasks” was an item “Work involves the disturbance or removal of asbestos”, which was ticked. Both also signed TTR’s SWMS. Under the heading “High Risk Work Involves” were a number of items including “[l]ikely to involve disturbing asbestos”, which had a cross against it. Both also completed Powercor’s online safety induction course.

38. Mr Catlin says he did not read the SWMS or JSEA before signing them and clicked through the screens of the online safety induction course without reading them. He says that Mr Lindsay simply told him: “You have to sign this”; and that the document he was given was open at the declaration page at the time he was asked to sign it. Mr Vial did not give evidence.

39. The declaration that Mr Catlin and Mr Vial signed stated that they had been consulted and had assisted in the development of the SWMS, that they had had an opportunity to comment on its content, that they had read and understood how they were to carry out the activities listed in the SWMS, that they had been supplied with the personal protective equipment identified in the SWMS and had been given training on its safe use, and that they had read and understood the requirements set out in the material safety data sheets for the hazardous substances identified in the SWMS.

40. Mr Catlin says that Mr Lindsay handed them two pairs of overalls and facemasks and told them at the time “You better put these on because there may be asbestos in this area”. Mr Catlin says that that was the first occasion on which anyone had mentioned asbestos to him. They put on the overalls and face masks but later removed them, although precisely when they removed them is not clear. They carried out NDD at two locations. Before beginning at the second location, Mr Catlin says that Mr Lindsay told him and Mr Vial to wait while the area was tested. Mr Catlin says that the person who conducted the testing was not wearing a mask or any special clothing to protect him from asbestos. Twenty minutes after the person conducting the testing left the area, Mr Lindsay returned with his son and instructed Mr Catlin and Mr Vial to start the NDD work at the second location.

41. The NDD work continued for about five hours. At the end of the work, Mr Catlin completed a job sheet and handed it to Mr Lindsay to be signed. The job sheet stated “DUMP OFF Site”. Soil samples were taken from the boreholes they had dug.

42. Also on 30 March 2016, Mr Doran says that he asked Mr Lindsay for the disposal receipts as soon as possible because TransGrid would be on site the following day to do an environmental safety audit and Powercor wanted everything to be in order. According to Mr Doran, he also reminded Mr Lindsay that the waste had to be disposed of at a licensed facility. Mr Doran was not told where the waste was disposed of until 1 April 2016.

43. Mr Catlin and Mr Vial delivered the waste to Bettergrow’s facility at around 4.44pm after asking Mr Maloney where to dispose of it.

44. Online had had an account with Bettergrow since August 2010. At the time the account was opened, Mr Maloney completed an Application for Credit form. The form stated that Bettergrow had its own weighbridge and that each truck would need to be registered and carry its own identity tag. It included the following declaration:

I/We have read and agree to the terms as set out above regarding account terms and weighbridge operations.

45. Stapled to the copy of the Application for Credit retained by Bettergrow was a document setting out Bettergrow’s criteria before accepting drill mud. That document stated that Bettergrow reserved the right “to refuse delivery of drill mud when there is cause for doubt of the content of the load” and that “If deliveries of drill mud are tipped with any obvious contamination, we will request the load be removed from the facility at the cost of the waste generator”. It also stated that one of the criteria that had to be satisfied before Bettergrow would accept drill mud was:

Drill mud must be free of contaminants such as plastics, metals and other obvious rubbish

Ms Kimberley Hogarth, who works as a weighbridge operator at Bettergrow, gave evidence that it was her practice to send a copy of that document to new customers. I accept that evidence. It is consistent with the fact that the document was stapled to Online’s Application for Credit. Consequently, it seems likely that the document was sent to Online, even though one is no longer in Online’s possession.

46. Ms Hogarth says that she assisted Mr Catlin and Mr Vial to complete the delivery dockets when they arrived at Bettergrow’s facility.

47. Mr Nathan Pedemont, an employee of Bettergrow who assists drivers to make their deliveries, says that he asked Mr Catlin and Mr Vial whether the load contained any contaminants. According to him, the drivers responded that it did not. Mr Catlin denies that he was asked that question. However, I think it is more likely that he was. It was an obvious question to ask. Not surprisingly, Mr Catlin had a poor recollection of precisely what happened at the time the waste was delivered to Bettergrow’s facility.

48. Mr Pedemont says that he then conducted visual and smell tests and found no sign of asbestos or any other contaminant. He then tested a grab sample to determine its pH and Electric Conductivity levels, which were both within the acceptable ranges. Mr Pedemont then permitted Mr Catlin and Mr Vial to unload the material into Bettergrow’s receival pit.

49. Mr Catlin and Mr Vial attended the Beaconsfield West site the following day again at about 7.00am. Again, they signed the JSEA. Mr Lindsay says that he requested the waste disposal dockets from Mr Catlin and that Mr Catlin said that Mr Johnstone had them and would send them to Mr Lindsay. Mr Lindsay then spoke to Mr Johnstone and asked him for the disposal dockets. Mr Catlin says that no one said anything about asbestos and he denies that Mr Lindsay asked for the waste disposal dockets. However, Mr Lindsay was being pressed for them and the likelihood is that he asked Mr Catlin or Mr Vial for them and spoke to Mr Johnstone after he was told that Mr Johnstone had them. There is a question whether Mr Catlin and Mr Vial wore protective clothing on that day. According to Mr Fania, an environmental advisor employed by TransGrid, he saw workers in the distance wearing overalls and protective equipment and recorded that fact in his audit report. However, that is not consistent with the evidence given by Mr Catlin. Nothing turns on the point. However, I prefer the evidence of Mr Catlin on this issue. Mr Fania only saw the workers in the distance. It is more likely that he would be mistaken about what Mr Catlin was wearing than Mr Catlin.

50. Mr Catlin and Mr Vial worked until about 1.30pm. Mr Catlin completed a job sheet, which he asked Mr Lindsay to sign. The job sheet stated “Dumping at betterGrow”. Mr Catlin also completed and signed Online’s Hazard Identification form. He placed a cross next to the box stating “Dangerous Goods/Hazardous substances are present on the site … “. They then took the waste to the Bettergrow facility and followed the same procedure as the one they had followed the previous day. Again, Mr Pedemont says that he asked if there were any contaminants and that he was told there were not.

51. Later that afternoon, Mr Rohan Last, the asbestos assessor, sent an email to Mr Doran stating that his tests had detected asbestos in the three areas where testing had been conducted. His email stated that the “results demonstrate a high risk for friable asbestos in fill across the site with residual risk outside the tested areas”.

52. Mr Doran received copies of the waste disposal dockets on 1 April 2016. After receiving the dockets, he spoke to Mr Joyce about the possibility that Bettergrow was not licensed to accept asbestos material and then rang Bettergrow and confirmed that it was not licensed. He then called Mr Lindsay and had a conversation with him to the following effect:

Mr Doran:   … I told you many times that the waste needed to go to a licensed facility and you said the NDD vacuum truck operators understood this.

Mr Lindsay:   I told them a number of times that there was asbestos contamination and they had to take their truck to a licensed facility. I don’t know how this happened.

Mr Doran:   You need to call Online and sort this out immediately. Someone needs to call Bettergrow straight away and let them know what’s happened so they can work out what to do with their facility. I am leaving this fix-up process to you to organise and you will need to keep Martin and I updated on your progress.

Mr Lindsay:   Ok.

53. Mr Lindsay then rang Mr Johnstone and told him that the two loads from the site may have contained asbestos and that Bettergrow was not licensed to receive asbestos contaminated waste. Mr Johnstone replied that in addition Online was not licensed to transport it. According to Mr Johnstone, that was the first time Mr Lindsay mentioned asbestos to him. Mr Johnstone then rang Mr Neale Hogarth, the Operations Manager for Bettergrow, and told him that the two loads may contain asbestos. Mr Lindsay also rang Mr Hogarth and apologised for what had happened. Mr Lindsay said that TTR had instructed Online to take the loads to a licensed facility.

54. After receiving those calls Bettergrow decided on 4 April 2016, to close its facility. It arrange for the mud to be tested. Those tests revealed the presence of asbestos. As a result, the facility remained closed until the mud was removed and the facility was decontaminated.

55. Mr Hogarth had a further conversation with Mr Lindsay on 4 April 2016 during which Mr Lindsay repeated his assertion that Online had been instructed to dispose of the waste at a licensed facility. Following that conversation, on the same day, Mr Lindsay sent an email to Mr Maloney, in which he said:

It was clearly requested both when ordering vac truck and also on site with the vac truck operators (during their site introduction and before they left site on the first day) that all vac waste was to be treated as potentially containing asbestos and was to be disposed of at a licensed disposal site for asbestos waste along with all tip dockets to be provided to ensure this process was adhered to.

56. Mr Maloney says that he has been unable to find a document in which Mr Lindsay made that request and that that instruction was never given.

57. On 5 April 2016, Mr Maloney sent an email to Mr Lindsay in which he denied that Online had been informed that the waste material had to be disposed of at a licensed facility and in which he denied that Online was responsible for any of the costs involved in rectifying the situation.

58. In reply, on 6 April 2016, Mr Lindsay denied that TTR or Powercor were responsible and said that the contamination would not have occurred if Online’s “operators [had] followed [its] clear instructions being either verbally or through site inductions, paperwork and processes”.

59. Mr Lindsay did not give evidence. However, on 6 April 2016, he sent Mr Joyce an email attaching a document headed “Facts, Communications and Instructions regarding engagement of Online to carry out NDD excavation and disposal of waste”. The document purports to record events between 21 March 2016 and 1 April 2016. According to that document, Mr Lindsay told Mr Maloney during a telephone call that occurred at 12.08pm on 29 March 2016 that “all waste taken out with vac truck had the potential of asbestos contamination and was to be treat [sic] as class b (non friable)” and that “all waste was to be taken to a license[d] asbestos waste facility and waste dockets to be provided as regular audits are carried out and waste dockets are proof of correct disposal”. The document also records that on 30 March 2016 at 7.20am:

Both operators [meaning Mr Catlin and Mr Vial] were required to complete the [Powercor] Health, safety and Environment Induction (highlights the potential for asbestos on site). Upon completion of induction both operators were instructed to read and sign onto TTR SWMS (highlights potential for asbestos on site). At this point site manager James Doran (in my presence) also spoke to operators in regard to asbestos on site and informed that all waste taken of [sic] site had to be taken to a license[d] facility and the waste disposal dockets to be forwarded as evidence of correct disposal.

60. In my opinion, very little weight can be placed on the document and I do not accept the assertions in it that Mr Lindsay told Mr Johnstone that the waste might have contained asbestos or that Mr Doran told Mr Catlin and Mr Vial that the waste had to be disposed of at a facility licensed to receive asbestos. The document appears to have been prepared after the relevant events. It is not a note of events as they occurred. It is contradicted by the sworn evidence of Messrs Johnstone, Catlin and Doran. It will be necessary to say more about what Mr Catlin knew about the presence of asbestos later in this judgment. However, in my opinion, it is not plausible that Mr Maloney would have accepted the job had he been told that the waste was likely to contain asbestos. He came across as an honest witness. The job was small. Mr Maloney knew that Online was not licensed to carry asbestos. There was no reason for him to accept the job if he thought that asbestos was involved. Mr Doran also came across as an honest witness. It may have assisted Powercor’s case if he had told Mr Catlin that the waste had to be disposed of at a facility licensed to take asbestos. However, he does not suggest that he did. Rather, he says that he left it to Mr Lindsay to deal with Online. That seems more likely, given that it was TTR who engaged Online and had the direct contact with it.

The claim against TransGrid

Did TransGrid owe Bettergrow a non-delegable duty of care?

61. As I have said, Bettergrow puts its case against TransGrid in two ways. First, it alleges that TransGrid owed it a non-delegable duty of care. Second, it alleges that TransGrid owed it an ordinary duty of care.

62. A non-delegable duty of care is a duty to ensure that reasonable care is taken by others in undertaking activities for, or at the request, or with the agreement of, the person said to owe the duty. It can arise in a number of situations. In Armes v Nottinghamshire County Council [2017] UKSC 60, the Supreme Court of the United Kingdom divided those situations into two types of case. First, there is a “large, varied and anomalous class of cases in which the defendant employs an independent contractor to perform some function which is either inherently hazardous or liable to become so in the course of his work” (at [33] per Lord Reed (with whom Lady Hale, Lord Kerr and Lord Clarke agreed), quoting Lord Sumption in Woodland v Essex County Council [2014] AC 537; [2013] UKSC 66 at [6] (with whom Lord Clarke, Lord Wilson and Lord Toulson agreed). Second, there are those cases where an “antecedent relationship” raises a “positive or affirmative duty to protect a particular class of persons against a particular class of risks” and “the duty is by virtue of that relationship personal to the defendant”: ibid, quoting Lord Sumption in Woodland at [7].

63. That categorisation of cases involving a non-delegable duty of care has not yet been adopted by the High Court. However, it provides a useful framework in which to consider the question whether a non-delegable duty of care is owed which is consistent with the approach taken by the High Court. The leading High Court decision is Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520; [1994] HCA 13. In that case, the majority (Mason CJ, Deane, Dawson, Toohey and Gaudron JJ), referring to the judgment of Mason J (with whom Deane and Dawson JJ agreed) in Kondis v State Transport Authority (1984) 154 CLR 672 at 687 (at 550-551); [1984] HCA 61, said:

In most, though conceivably not all, of such categories of case [that is, cases where a non-delegable duty arises], the common "element in the relationship between the parties which generates [the] special responsibility or duty to see that care is taken" is that "the person on whom [the duty] is imposed has undertaken the care, supervision or control of the person or property of another or is so placed in relation to that person or his property as to assume a particular responsibility for his or its safety, in circumstances where the person affected might reasonably expect that due care will be exercised". It will be convenient to refer to that common element as "the central element of control". Viewed from the perspective of the person to whom the duty is owed, the relationship of proximity giving rise to the non-delegable duty of care in such cases is marked by special dependence or vulnerability on the part of that person. (footnotes omitted).

64. Bettergrow in effect contends that the present case falls into the first type of case identified by the Supreme Court of the United Kingdom and that the features that attract a non-delegable duty of care in this case are that the removal and disposal of asbestos is a hazardous activity to which Bettergrow was particularly vulnerable, with the result that TransGrid owed it a non-delegable duty to ensure that those disposing of asbestos located on its property took reasonable care to do so properly.

65. Put in those terms, the statement of the duty raises a number of questions concerning the relationship between TransGrid and Bettergrow which are relevant to the question whether TransGrid owed Bettergrow an ordinary duty of care and to which it will be necessary to return. However, in the present context there are at least three difficulties with the proposition that the facts of the case give rise to a non-delegable duty of care.

66. First, it could not be said that the removal of the waste resulting from the NDD work on TransGrid’s premises and the disposal of that waste was a particularly hazardous activity to which Bettergrow was vulnerable. There can be no question that in some circumstances, the removal of asbestos can pose a particular hazard to human health. But the question is not whether asbestos and its removal are in certain circumstances hazardous. The question is whether the activities that were actually carried out were hazardous to Bettergrow. Those activities involved NDD in areas thought not to contain asbestos, the disposal of the resulting waste and the carrying out of further testing for asbestos before commencing excavation work in those areas. There is no evidence that that work posed a significant risk to the health of anyone; and what Bettergrow complains about is not the risk of harm to the health of anyone but the financial loss it suffered because material that was thought not to contain asbestos did. It is true, of course, that TransGrid imposed contractual obligations on Powercor to put in place procedures that were intended to guard against the risk that the waste material might have contained asbestos. However, the fact that TransGrid chose to take those precautions does not demonstrate that the NDD and disposal of the resulting waste posed a particular hazard to Bettergrow.

67. Second, Bettergrow was not particularly vulnerable to the disposal of waste contaminated with asbestos. A non-delegable duty of care normally arises in situations such as the one under consideration because one landowner permits or engages someone to carry out an activity on the landowner’s land which presents a particular hazard to adjacent landowners. So, for example, in Burnie Port Authority, the landowner engaged an independent contractor to undertake certain building extensions which involved welding activities in close proximity to highly flammable material. The plaintiff in that case was a licensee of part of the building in which the activities were undertaken. It was particularly vulnerable to the risk of fire arising from the welding work; and it could do nothing to protect itself against that risk. The non-delegable duty was held to arise in circumstances where the court also rejected the rule of strict liability of landowners for the escape of dangerous substances, and in particular fire, from their land established in Rylands v Fletcher (1866) LR 1 Exch 265; affd (1868) LR3HL 330.

68. Another example given by the High Court in Burnie Port Authority was adjoining owners of land in relation to work threatening support or common walls: at 550. In the present case, however, Bettergrow was not obliged to take waste from anyone. It could undertake tests or require evidence that the material had been tested before it was delivered. It could have made enquiries about where the material came from. It could have imposed contractual obligations on persons delivering waste to its facility, so that they were strictly liable for any contaminants it contained. Some of these steps may have been more or less practical. The point, however, is that there were a range of steps that Bettergrow could have taken to protect itself against the possibility that waste delivered to its facility might contain asbestos. In contrast, there is nothing that the plaintiff in Burnie Port Authority could have done to protect itself against the risks associated with the hazardous activities that were carried out on a neighbouring site.

69. Third, there is no reason to add to the categories of a case where a non-delegable duty is owed cases such as the present. Cases where a non-delegable duty of care have been found to exist are anomalous. As Hayne J explained in Leichhardt Municipal Council v Montgomery (2007) 230 CLR 22; [2007] HCA 6 at [156], courts should not add to them where “there is no sound doctrinal basis for the notion, and there is no pressing practical reason for doing so”. In general, courts have held that a person does not owe a non-delegable duty of care to ensure that reasonable care is taken by an independent contractor, even where the contractor undertakes ultra-hazardous activities: see Stevens v Brodribb Sawmilling Company Pty Ltd (1986) 160 CLR 16 at 29-30 per Mason J; [1986] HCA 1; Transfield Services (Australia) Pty Ltd v Hall (2008) 75 NSWLR 12; [2008] NSWCA 294 at [90] per Campbell JA. As Gleeson CJ pointed out in Leichhardt Municipal Council at [23], to impose on a person a duty to prevent each specific act of negligence by a contractor would be to impose an impossible burden on that person. And to do so where the contractor is likely to have specialised skills to undertake the relevant tasks that the person engaging the contractor does not have would be unreasonable.

70. The facts of the present case are far removed from those in which a non-delegable duty of care has been found to exist. As will become apparent, Bettergrow struggles to give a coherent account of how Powercor or TTR came to owe an ordinary duty of care to Bettergrow. Consequently, the question of a non-delegable duty of care on the part of TransGrid in respect of their conduct cannot arise. For reasons which I will explain, Online also did not owe Bettergrow a duty of care. However, even if that is wrong, to say that TransGrid owed a non-delegable duty of care is to say that it is responsible for any failure on the part of Online to take reasonable care in delivering the waste taken from TransGrid’s premises to Bettergrow. But why TransGrid should be responsible for Online’s conduct is not explained. TransGrid did not engage Online and was not responsible for supervising its activities. It did not have the requisite skills to undertake the refurbishment work. It engaged Powercor to do so. There is no practical reason for imposing a non-delegable duty of care on TransGrid in those circumstances.

Did TransGrid owe Bettergrow an ordinary duty of care?

71. Section 5B of the CLA provides:

5B   General principles

(1)   A person is not negligent in failing to take precautions against a risk of harm unless:

(a)   the risk was foreseeable (that is, it is a risk of which the person knew or ought to have known), and

(b)   the risk was not insignificant, and

(c)   in the circumstances, a reasonable person in the person’s position would have taken those precautions.

(2)   In determining whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (amongst other relevant things):

(a)   the probability that the harm would occur if care were not taken,

(b)   the likely seriousness of the harm,

(c)   the burden of taking precautions to avoid the risk of harm,

(d)   the social utility of the activity that creates the risk of harm.

72. As will become apparent, the question whether the defendants, including TransGrid, owed Bettergrow a duty of care in this case is to be decided largely by reference to the common law, rather than any particular requirement of s 5B. However, as this section makes plain, it is essential in determining the question whether a duty of care was owed to identify the relevant risk of harm and the reasonable precautions that it is said should have been taken to avoid that harm: Roads and Traffic Authority of NSW v Dederer (2007) 234 CLR 330; [2007] HCA 42 at [59] per Gummow J; Garzo v Liverpool / Campbelltown Christian School [2012] NSWCA 151 at [22] per Meagher JA.

73. Bettergrow puts its claim that TransGrid (and the other defendants, to whom it will be necessary to return) owed it a duty of care in two ways. First, it contends that the loss in respect of which it sues includes physical injury to property and that in cases of physical injury to property reasonable foreseeability will normally suffice for the existence of a duty of care. In this case, it submits that it was reasonably foreseeable that Bettergrow would suffer loss if asbestos contaminated waste was delivered to its facility and that that was sufficient to establish the existence of a duty of care.

74. Second, Bettergrow contends that, even assuming that its claim is one for economic loss and that the current circumstances are novel, a duty of care should be found to exist in accordance with accepted principles that apply in determining the existence of a duty of care in novel circumstances.

75. In my opinion, there are difficulties with both limbs of the first way in which Bettergrow puts its case.

76. Bettergrow contends that it suffered physical injury in two ways. First, it says that the mud in its facility was damaged because it was contaminated with asbestos. Second, it says that the facility was damaged because it could not be used for a period of time. I accept that the first type of damage is physical damage. However, Bettergrow makes no claim in respect of that damage. It does not, for example, claim damages calculated by reference to the value of the mud, the cost of replacing the mud or consequential loss arising from the fact that it could not supply processed mud to a third party. Rather, the damages it claims fall into two categories. First, it claims the costs of decontaminating the facility. Second, it claims losses arising from the fact that it could not charge fees for the delivery of waste to its facility for processing while the facility was closed and it took a period of time to regain customers who had previously paid it fees to deliver their waste to its facility after the facility reopened. It is true that those losses arise from the contamination of the mud. But it seems to me artificial to say that that means that the claim is a claim for physical damage to property. The claim was made not because the mud was damaged but because the facility was contaminated.

77. I do not accept that the second type of loss can properly be treated as physical damage to property. There is no evidence that any part of the facility was physically altered as a consequence of the contaminated mud. Rather, the evidence is that the facility was closed while the mud was removed and the equipment cleaned. The mere fact that the facility was closed does not mean that it was damaged. As Meagher JA (with whom Clarke and Sheller JJA agreed) pointed out in Transfield Constructions Pty Ltd v GIO Australia Holdings Pty Ltd [1996] NSWCA 538 at 1-2; “[f]unctional in utility is different from physical damage”; and although that statement was made in the context of an insurance policy providing cover in respect of “physical loss or damage including destruction”, it is equally apposite in the present context.

78. As to the second limb of the argument, Bettergrow, referring to the decision of Campbell J in Sydney Water v Asset Geotechnical Engineering [2013] NSWSC 1274 at [118], submits that in circumstances where one is dealing with physical injury to property, reasonable foreseeability of the relevant harm "will commonly suffice to establish that the facts fall into a category which has already been recognised as involving a relationship of proximity between the parties with respect to such an act and such damage and as attracting a duty of care, the scope of which is settled".

79. The passage in quotes is taken from the decision of the High Court in Bryan v Maloney (1995) 182 CLR 609; [1995] HCA 17. There Mason CJ and Deane and Gaudron JJ said (at 617-8):

The cases in this Court establish that a duty of care arises under the common law of negligence of this country only where there exists a relationship of proximity between the parties with respect to both the relevant class of act or omission and the relevant kind of damage. In more settled areas of the law of negligence concerned with ordinary physical injury to the person or property of a plaintiff caused by some act of the defendant, reasonable foreseeability of such injury will commonly suffice to establish that the facts fall into a category which has already been recognized as involving a relationship of proximity between the parties with respect to such an act and such damage and as “attracting a duty of care, the scope of which is settled”. In contrast, the field of liability for mere economic loss is a comparatively new and developing area of the law of negligence. In that area, the question whether the requisite relationship of proximity exists in a particular category of case is more likely to be unresolved by previous binding authority with the consequence that the “notion of proximity … is of vital importance” (footnotes omitted).

80. This passage, however, does not stand for the broad proposition that in cases of physical injury to property, reasonable foreseeability is normally sufficient to establish the existence of a duty of care. Leaving aside the central role attributed to the notion of proximity, which has been modified by later cases, all Mason CJ and Deane and Gaudron JJ were saying was that in recognised classes of cases involving physical damage to a person’s property by the conduct of another, it will normally be sufficient to establish that the damage was reasonably foreseeable to establish the existence of a duty of care in the particular case in question. They were not saying that reasonable foreseeability was normally sufficient to establish the existence of a duty of care to avoid all physical harm, no matter how novel the situation.

81. In this case, Bettergrow claims that TransGrid owed it a duty to cause others to take some steps which it is said would have meant that Bettergrow would not have suffered the harm that it did; and that that is so notwithstanding the fact that TransGrid was not even aware of Bettergrow’s existence. On no view could that be described as a category of case in which the law has recognised the existence of a duty of care to avoid causing physical injury. Moreover, even on Bettergrow’s analysis, reasonable foreseeability is normally sufficient. It is not said to be always sufficient. The present case is so different from the typical case in which the action of one person causes physical injury to the person or property of another that even on Bettergrow’s statement of the principle, the case cannot fall within it.

82. The principles for determining whether a duty of care exists in a novel case were summarised by Allsop P (with whom Simpson J agreed) in Caltex Refineries (Qld) Pty Limited v Stavar (2009) 75 NSWLR 649; [2009] NSWCA 258 at [102]-[103] in these terms:

102   … If … the posited duty is a novel one, the proper approach is to undertake a close analysis of the facts bearing on the relationship between the plaintiff and the putative tortfeasor by references to the “salient features” or factors affecting the appropriateness of imputing a legal duty to take reasonable care to avoid harm or injury.

103   These salient features include:

(a)   the foreseeability of harm;

(b)   the nature of the harm alleged;

(c)   the degree and nature of control able to be exercised by the defendant to avoid harm; 

(d)   the degree of vulnerability of the plaintiff to harm from the defendant’s conduct, including the capacity and reasonable expectation of a plaintiff to take steps to protect itself; 

(e)   the degree of reliance by the plaintiff upon the defendant; 

(f)   any assumption of responsibility by the defendant;

(g)   the proximity or nearness in a physical, temporal or relational sense of the plaintiff to the defendant;

(h)   the existence or otherwise of a category of relationship between the defendant and the plaintiff or a person closely connected with the plaintiff;

(i)   the nature of the activity undertaken by the defendant;

(j)   the nature or the degree of the hazard or danger liable to be caused by the defendant’s conduct or the activity or substance controlled by the defendant;

(k)   knowledge (either actual or constructive) by the defendant that the conduct will cause harm to the plaintiff;

(l)   any potential indeterminacy of liability;

(m)   the nature and consequences of any action that can be taken to avoid the harm to the plaintiff;

(n)   the extent of imposition on the autonomy or freedom of individuals, including the right to pursue one’s own interests;

(o)   the existence of conflicting duties arising from other principles of law or statute;

(p)   consistency with the terms, scope and purpose of any statute relevant to the existence of a duty; and

(q)   the desirability of, and in some circumstances, need for conformance and coherence in the structure and fabric of the common law. 

83. One difficulty in considering this aspect of Bettergrow’s case is that in its submissions, it never clearly distinguished between the positions of the different defendants or identified the precise aspects of the relationship between Bettergrow and the relevant defendant which were said to give rise to a duty of care. Indeed, it had difficulty in articulating the nature of the duty and to whom the duty was said to be owed.

84. In the case of TransGrid, it is pleaded in para 129 of the Second Further Amended Technology and Construction List Statement (2FATCLS) that TransGrid owed Bettergrow a duty “to exercise reasonable care to avoid causing Bettergrow harm by the illegal dumping of its waste at Bettergrow’s Facility”. That duty and its contents are said to be informed by the various statutory provisions governing the handling of asbestos. So, for example, it was suggested that the duty owed by TransGrid included a duty to take reasonable care to ensure that those working on the site were licensed to do so and did so in a manner which was consistent with their statutory obligations. In the 2FATCLS, Bettergrow frames the duty as one owed to it. Subsequently, faced with the difficulty that Bettergrow was not even in the contemplation of the defendants at the time that the duty was said to arise, it suggested that the duty was owed to facilities that were not licensed to receive waste containing asbestos, having earlier accepted the proposition that the duty must be owed to anyone who might suffer loss if the waste were not disposed of at a facility licensed to receive asbestos.

85. It is not easy to make sense of the formulation “reasonable care to avoid causing Bettergrow harm” in the context of this case. Expressed in those terms, the duty is expressed at a level of generality that deprives it of any real content. TransGrid itself engaged in no activities that might have caused Bettergrow harm. It entered into a contract for those activities to be undertaken by others. The suggestion appears to be that TransGrid owed a duty to take reasonable care in supervising its contractor (Powercor) and its contractor’s contractors and sub-contractors. Relevantly, it appears to be said that that duty included a duty to take reasonable care to ensure that any contractor or subcontractor carrying on work on the site was licensed to deal with asbestos, and a duty to take reasonable care to ensure that any waste was delivered to a facility licensed to receive asbestos.

86. There are, however, difficulties with those contentions. As Dixon J pointed out in Smith v Leurs (1945) 70 CLR 256 at 262:

It is, however, exceptional to find in the law a duty to control another’s actions to prevent harm to strangers. The general rule is that one man is under no duty of controlling another man to prevent his doing damage to a third.

There are, as Dixon J acknowledged, exceptions to that principle. One that his Honour mentioned was the duty of a parent who maintains control over a young child to take reasonable care in the exercise of that control so as to avoid harm to the property or person of another. But the statement of principle still remains good law: for discussion, see R P Balkin and J L R Davis, Law of Torts, (5th ed, 2013, LexisNexis) at [7.28].

87. Bettergrow advanced no reason why an exception should be created in respect of a principal and contractor, let alone a principal and the contractor’s contractors and subcontractors. Nor does it explain clearly the scope of the exception for which it contends. In the case of building work, it is usual for a principal to engage a contractor with specialised knowledge and skill to undertake the relevant work and it is usual for the contractor to engage subcontractors to undertake certain work within their respective specialisations. Frequently, the contractor or subcontractor will be in a better position than the principal to understand the relevant risks and take appropriate action to guard against them. It is inappropriate to impose a duty of care in the supervision of those persons in carrying out their activities on the principal in those circumstances.

88. In the present case, TransGrid undertook a degree of supervision of the refurbishment work in part, no doubt, because the relevant legislation made it strictly liable in certain respects for the health and safety of persons working on the site. In its submissions, Bettergrow places emphasis on various concessions made by TransGrid employees about what should have been done by TransGrid. So, for example, it points to evidence given by Mr Stephen Bell, TransGrid’s project manager, that TransGrid’s site manager should have turned his mind to whether those carrying out the work were appropriately licensed. However, what employees of TransGrid should or should not have done to comply with procedures adopted by TransGrid to ensure compliance with relevant legislation concerned with the protection of workers and the environment says nothing about whether it owed a duty of care to those who might suffer property damage or economic loss if it failed to exercise reasonable care in undertaking the supervision that it did.

89. Moreover, to hold that TransGrid owed a duty of care to a class of which Bettergrow was a member would produce anomalous results. In Leighton Contractors Pty Ltd v Fox (2009) 240 CLR 1; [2009] HCA 35, the High Court reaffirmed the principle that principals do not owe a duty of care to independent contractors other than a duty in some circumstances to use reasonable care to ensure that a system of work for one or more independent contractors is safe. In that case, Leighton was the principal contractor on a building project. It subcontracted the concreting work to Downview, which subcontracted the concrete pumping work to Messrs Still and Cook who, in turn, engaged Messrs Fox and Stewart in connection with the concrete pumping for a particular pour. After the pour was completed, Messrs Still, Stewart and Fox commenced cleaning the concrete delivery pipes. As a result of Mr Stewart’s negligence while that was being done, the end pipe swung and hit Mr Fox in the head, injuring him severely. The High Court, reversing the decision of the NSW Court of Appeal, held that neither Leighton nor Downview owed Mr Fox a duty to take reasonable care to prevent the harm from which he suffered. That conclusion depended on a rejection of a finding of the Court of Appeal that Leighton and Downview owed a duty to provide induction training to Messrs Fox and Stewart in the safe method of line cleaning. But if in Leighton neither the head contractor nor the principal subcontractor owed a duty of care to those working on the site to provide adequate training to subcontractors to prevent the risk of physical injury, it is difficult to see how it could be said in the present case that TransGrid owed a duty to take reasonable care in supervising its contractors and subcontractors to prevent the risk of physical damage or economic loss to Bettergrow.

90. In addition, Bettergrow did not give a coherent explanation of to whom the duty was owed. As I have said, it effectively abandoned the allegation that the duty was owed to Bettergrow. An allegation in those terms impermissibly seeks to frame the duty retrospectively rather than prospectively: see Badenach v Calvert (2016) 257 CLR 440; [2016] HCA 18 at [79] per Gordon J; Roads and Traffic Authority of NSW v Dederer (2007) 234 CLR 330; [2007] HCA 42 at [65]-[67] per Gummow J. Bettergrow ultimately sought to identify the class to whom the duty was owed as waste disposal facilities that were not licensed to receive asbestos. However, what set them apart from anyone else who might have suffered harm from a failure to dispose of waste containing asbestos properly was not explained. In effect, the duty relied on by Bettergrow was a duty to everyone who might suffer loss if the waste containing asbestos were not disposed of properly. But the imposition of such a broad duty is not consistent with the approach that the law generally takes to the imposition of a duty of care.

91. As TransGrid pointed out in its submissions, many of the other criteria identified by Allsop P in Caltex Refineries (Qld) Pty Limited v Stavar count against the existence of a duty of care in this case. TransGrid had limited control over where the waste would be disposed of. For the reasons I have already given, Bettergrow was not particularly vulnerable to the delivery of asbestos to its facility since it could control what was delivered. Bettergrow did not rely on TransGrid and TransGrid did not assume any responsibility to Bettergrow. There were no connections between Bettergrow and TransGrid suggesting any relevant proximity. There was no voluntary action by TransGrid which would make it responsible for the delivery of waste contaminated with asbestos. For the reasons I have given, the activities in question were not particularly hazardous; and TransGrid had no reason to believe that its conduct was likely to cause harm to Bettergrow or anyone else.

Did TransGrid breach any duty of care that it owed?

92. Bettergrow pleads a long list of breaches on which it relies. Most of them are expressed in terms of an absolute failure to do certain things rather than a failure to take reasonable care. So, for example, it is said that TransGrid failed to ensure compliance with the AMP and failed to ensure that asbestos waste was deposited at a licensed waste facility. Allegations of that type are not allegations of negligence; and they can be put to one side. A few so obviously could not have caused the loss that they also can be put to one side. So, for example, it is alleged that TransGrid was negligent in conducting the CEMP audit on or about 31 March 2016 by failing to identify “that excavation and digging works were being conducted on 30 and 31 March 2016 without confirmation that the soil was not contaminated and without such works being carried out by a licensed asbestos contractor and in the presence of an asbestos supervisor”. But how, realistically, an audit that commenced sometime on 31 March 2016 could have prevented the delivery of contaminated material to Bettergrow on 30 and 31 March 2016 is not explained.

93. Ultimately, Bettergrow’s position appears to be that TransGrid was negligent in two main respects. First, it is said that TransGrid failed to take reasonable care to ensure that the waste was disposed of at a facility licensed to take asbestos. Second, it is said that TransGrid failed to take reasonable care to ensure that the contractors engaged to remove the waste held the appropriate licences.

94. Underlying those contentions is an assumption that TransGrid knew or ought to have known that the waste was contaminated with asbestos or that there was a sufficient risk that it was, that it ought to have taken reasonable steps to ensure that the waste was removed by someone licensed to remove asbestos and that it was disposed of at a facility licensed to receive it. TransGrid certainly proceeded on that basis; and no doubt it did so because of the strict obligations placed on it by the relevant regulations and the criminal penalties for which it may have been liable if it breached those regulations. However, it is plain that TransGrid was not aware that asbestos was present where the NDD occurred and there is a question whether a reasonable person in its position would have proceeded on that basis in discharging a duty of care to Bettergrow. The test boreholes indicated that asbestos was not present in the area. The proposal was to do further testing following the NDD. Absent the results of further testing, the likelihood was that asbestos was not present in the area where the NDD occurred. However, I am prepared to accept that a reasonable person in the position of TransGrid would have appreciated that there was a sufficient risk that the waste generated by the NDD was contaminated with asbestos that it should have proceeded on that basis.

95. There are, however, still problems with the way in which Bettergrow appears to puts its case. One problem is that, in effect, the allegations of negligence and the particulars that are given do little more than assert that the duty was breached. As I have said, in substance, the duty that is alleged appears to be a duty to take reasonable care to ensure that the NDD was undertaken by persons licensed to deal with asbestos and a duty to take reasonable care to ensure that the resulting waste was disposed of at a facility licensed to receive asbestos. But the relevant acts of negligence are simply asserted to be a failure to comply with those duties. There is little indication of what TransGrid did not do and should have done or what it did do that it should not have.

96. Before work commenced, TransGrid obtained environmental reports dealing with, among other things, asbestos. There is no suggestion that the consultants it obtained were not suitable to undertake that work or that they went about the task in the wrong way, let alone that TransGrid should have appreciated that fact. The reports that TransGrid obtained suggested that asbestos was not present in the areas where the NDD was to occur. Nonetheless, TransGrid imposed on its contractor, Powercor, a contractual obligation to deal with all waste as if it contained asbestos. There is no suggestion that TransGrid was negligent in retaining Powercor as the principal contractor to undertake the refurbishment work. TransGrid conducted periodic audits of Powercor’s compliance with the contract. TransGrid also retained the right to approve subcontractors. TransGrid approved TTR. It appears that it was not asked to approve Online. No explanation is given for how TransGrid was negligent in the way it went about approving TTR, if that is what is alleged.

97. In two of the particulars added by the 2FATCLS, it is suggested that TransGrid should have caused “the disposal docket MMS’d to [Powercor’s] site manager immediately after disposal as proof thereof” and should have implemented a system by which Powercor’s site manager and TransGrid’s site manager signed off “on the classification of material leaving the site and the intended disposal location to control where such material was disposed of”. However, no argument was advanced in support of those allegations. It is not clear how TransGrid (or Powercor, for that matter) could have required disposal dockets to be MMS’d to Powercor’s site manager. Those dockets were delivered by Bettergrow to Online. It is not clear how immediate delivery of the disposal dockets would have prevented at least the first delivery to Bettergrow. Nor is it clear why the delivery dockets should be singled out as something that ought to have been delivered to the site manager immediately. And if the site manager were informed of everything that happened on and in relation to the site immediately after it occurred, it is not clear how the site manager could have been expected to keep track of all that information.

98. It appears that following the discovery of asbestos in the area where the NDD took place, TransGrid and Powercor put in place a system by which each of their site managers signed a register recording the classification of waste that was removed from the site and the intended disposal location of that waste. However, the fact that that system was introduced subsequently does not explain why it should have been applied before the asbestos was discovered and at a time when it was not expected that the area the subject of NDD was contaminated with asbestos. At least up until that time, it was reasonable for TransGrid to expect that Powercor would arrange for the waste to be disposed of in accordance with the AMP.

99. For those reasons, the claim that TransGrid was negligent must fail.

Did any breach of duty by TransGrid cause Bettergrow’s losses?

100. The question whether particular harm was caused by negligence is governed by s 5D of the CLA, which relevantly provides:

5D   General principles

(1)   A determination that negligence caused particular harm comprises the following elements:

(a)   that the negligence was a necessary condition of the occurrence of the harm (factual causation), and

(b)   that it is appropriate for the scope of the negligent person’s liability to extend to the harm so caused (scope of liability).

(2)   In determining in an exceptional case, in accordance with established principles, whether negligence that cannot be established as a necessary condition of the occurrence of harm should be accepted as establishing factual causation, the court is to consider (amongst other relevant things) whether or not and why responsibility for the harm should be imposed on the negligent party.

(3)   …

101. As I have said, the case that TransGrid was negligent appears to have two main aspects. One is that it failed to exercise reasonable care to ensure that the NDD waste was disposed of appropriately. The other is that it failed to exercise reasonable care to ensure that those undertaking the work were licensed.

102. It is not easy to apply s 5D to the first type of negligence because Bettergrow for the most part, did not identify precisely what TransGrid should have done and did not do (or did do and should not have). Consequently, it is not possible to say whether that conduct was a necessary condition of the occurrence of the harm.

103. As I have said, two specific matters that Bettergrow did identify were the requirement that the disposal dockets be sent immediately to Powercor’s site manager and the establishment of a waste disposal register. If what TransGrid should have done was require the disposal dockets to be MMS’d to Powercor’s site manager, it would have been necessary to investigate how that could have been done, when that was likely to have occurred, what the site manager was doing at the time and what steps he would have taken after having received the MMS. But none of that was done and it is difficult to see how that would have prevented the contamination since the disposal dockets would have been produced after the waste was delivered to Bettergrow.

104. Similarly, if what is alleged is that TransGrid should have signed a register recording its approval of the location at which the waste would be disposed of, it would be necessary to investigate how that would have come to the attention of Online and what would have happened if it had. But again, none of that was done.

105. Similar issues also arise in relation to Bettergrow’s allegation that TransGrid was negligent in not taking reasonable steps to ensure that Online and TTR were licensed to deal with asbestos or that the NDD work was carried out by a licensed contractor. It will be necessary to say more about the position of TTR and Online later. However, it is apparent that TTR understood that the waste was to be disposed of at a facility licensed to take asbestos. How would its having had a licence have made any difference? On the facts of the case, Online was either informed that the waste contained asbestos or it was not. In either event, it is difficult to see what difference a licence would have made in its case either.

106. The suggestion appears to be that if the NDD work had been undertaken by someone with a licence, it is more likely that that person would have disposed of the waste at a facility licensed to receive asbestos waste. However, there are two problems with that contention. First, the contention begs the question of the precise circumstances in which that person would have been engaged and therefore the question whether it was the absence of a licence rather than something else that could be said to have caused the loss. Second, it still does not amount to a claim that the absence of a licence was a necessary condition of the harm from which Bettergrow suffered. At most, all that could be said is that the harm would have been less likely to occur. Bettergrow submits that this is one of those exceptional cases referred to in s 5D(2) of the CLA where it is not necessary to establish that the conduct was a necessary condition of the harm. However, it points to no authority that supports the proposition that a fact that increases the likelihood of a particular event can be regarded as a cause of that event; and such an approach would completely alter the concept of causation set out in s 5D.

The claim against Powercor

107. The claim against Powercor raises similar issues to the claim against TransGrid, although the claim is limited to a claim that Powercor owed Bettergrow an ordinary duty of care.

Did Powercor owe Bettergrow a duty of care?

108. So far as a duty of care is concerned, Powercor is alleged in para 132 of the 2FATCLS to owe the same duty of care to Bettergrow as TransGrid. That allegation suffers from the same problems as the allegation against TransGrid. To the extent that the allegation is an allegation that Powercor owed Bettergrow a duty to take reasonable care to ensure that TTR and Online did particular things, what is alleged is a duty to supervise. For the reasons given, no such duty of care should be imposed on Powercor in relation to TransGrid’s subcontractors and subcontractors’ subcontractors; and no such duty should be imposed to avoid causing economic loss to Bettergrow or to some class of which Bettergrow is a member.

109. The one material difference between the position of Powercor and the position of TransGrid is that Powercor chose TTR, which it knew or ought to have known was not licensed to deal with asbestos. But it still does not follow that Powercor owed a duty to Bettergrow to take reasonable care to choose a civil works contractor that was licensed. For the reasons already given, it is not appropriate to impose on Powercor a duty to Bettergrow to choose a licensed subcontractor to carry out the civil works. Bettergrow could not have been within Powercor’s contemplation as someone who might be affected by the choice of subcontractor and any risk of harm that Bettergrow might have suffered as a result of delivery of asbestos contaminated waste to its facility was a risk against which Bettergrow could have taken steps to guard.

Did Powercor breach its duty of care?

110. Again, this question raises similar issues to those raised by the same question in relation to TransGrid. Again, many of the particulars of breach are the same or are similar and suffer from the same problems as those identified in relation to the particulars of breach alleged against TransGrid.

111. Powercor plainly told TTR that all waste was to be disposed of at a waste facility licensed to receive asbestos. The AMP was given to Mr Lindsay and that is what it said. Mr Doran gave evidence that he told Mr Lindsay on at least two occasions that the NDD work had to be carried out by someone licensed to remove asbestos and that the waste had to be delivered to an appropriate facility. I accept that evidence. Mr Doran came across as an honest witness. His evidence was consistent with the AMP. In correspondence after the event, Mr Lindsay did not assert that he had not been told to proceed on the basis that the relevant waste contained asbestos. Rather, his position appears to be that he passed that information on to Online. There is no reason for Mr Doran to have disbelieved Mr Lindsay when Mr Lindsay told him that he (Mr Lindsay) had given the appropriate instructions to Online. In my opinion, there was nothing more that Powercor could reasonably be expected to have done.

112. Much was sought to be made of the fact that Powercor chose TTR without satisfying itself that TTR had the appropriate licences to carry out the removal of asbestos. Powercor led some evidence from Mr Last, who was an environmental scientist employed by ENRS, concerning the question whether the NDD comprised asbestos removal work which would trigger a requirement that the work be supervised by a licensed asbestos removalist. It is not, however, necessary to resolve that question. The question is not what the legislation required but whether Powercor was negligent in choosing a contractor who was not licensed. I have already explained why no such duty was imposed on Powercor. However, if it was, it was self-evidently breached and the only question is whether Bettergrow’s damage was caused by that breach.

113. Bettergrow repeats its allegation that Powercor was negligent in failing to put in place earlier a procedure by which its and TransGrid’s site managers signed a waste register recording the classification of waste and the intended disposal location. In my opinion, Powercor was in the same position as TransGrid in this respect. At least until the time that asbestos was discovered in the area where NDD was carried out and it was discovered that the waste had not been disposed of in accordance with the AMP, Powercor was entitled to proceed on the basis that TTR would comply with the directions that it was given. The same point applies to any further steps it is said Powercor should have taken prior to the discovery of asbestos in the area in question and the fact that, contrary to what Mr Lindsay had told Mr Doran, the waste had not been disposed of in accordance with the AMP.

Did any breach of duty by Powercor cause Bettergrow’s losses?

114. This issue raises the same issues of causation as the case against TransGrid. For the same reasons, I am not satisfied that any breaches of duty by Powercor caused Bettergrow’s loss.

The claim against TTR

115. No claim is advanced against TTR by Bettergrow since TTR is in liquidation. However, the liability of TTR to Bettergrow remains relevant to the claim that TransGrid owed Bettergrow a non-delegable duty of care and to the defences raised by each of TransGrid, Powercor and Online that the claims against them are apportionable claims and that TTR is a concurrent wrongdoer which is liable for a proportion of the amount claimed.

116. The claim that TTR owed Bettergrow a duty of care is stronger than the claim that TransGrid and Powercor did. Mr Lindsay knew that there was a risk that the NDD waste would be contaminated with asbestos and he knew from the job sheet that at least the second load would be delivered to Bettergrow, although it is unclear from the evidence whether he appreciated at the time he signed the job sheet that Bettergrow was not licensed to take asbestos. However, there remain insuperable problems with the claim that TTR owed Bettergrow a duty of care. The claim still involves a claim that TTR owed Bettergrow a duty of care to supervise the disposal of waste by Online in circumstances where Bettergrow was in a position itself to determine what waste it accepted and what waste it rejected and in circumstances where Bettergrow did not rely on TTR and TTR did not assume any responsibility to Bettergrow. In my opinion, no duty of care arose in those circumstances.

117. On the other hand, if TTR owed Bettergrow a duty to take reasonable care, it breached it. The duty presumably would be a duty to take reasonable care to ensure that the waste was delivered to a facility licensed to take asbestos. A reasonable person on whom that duty was imposed would at least give an instruction to Online to deliver the waste to an appropriate facility and, having been told where the waste was to be taken, would at least have enquired whether that facility was licensed to receive waste contaminated with asbestos. There is no reason to think that Online would not have complied with such an instruction if it had been given. In addition, there is no reason to think that Online would have told TTR that Bettergrow was licensed to take waste containing asbestos when Mr Maloney and Mr Johnstone knew that it was not and Mr Catlin either knew that it was not or did not know one way or the other. Consequently, TTR’s breach of duty (failing to give appropriate instructions to Online) was a necessary condition of the harm. There is no reason why, if it owed the duty, the scope of its liability should not extend to the consequences of the failure to give that instruction. For those reasons, if TTR did breach a duty of care, Bettergrow’s loss was caused by that breach.

The claim against Online

118. As I have said, the case against Online is put in both contract and negligence. It is convenient to start with the case in contract.

What were the terms of the contract between Online and Bettergrow?

119. Bettergrow pleads that it was an express term of the contract between it and Online that drill mud had to be free of contaminants such as plastics, metal and other obvious rubbish, and that it was an implied term of the contract that asbestos or ACM (that is, asbestos containing material) would not be deposited at its facility.

120. As I have explained, it is likely that Bettergrow provided Online with a copy of the document setting out the terms on which it would accept drill mud at the time that Online completed the Application for Credit. That document plainly set out the terms on which Bettergrow was prepared to accept drill mud for processing. Those terms were accepted by Online by delivering drill mud to Bettergrow’s facility. It was an express term of the document that “Drill mud must be free of contaminants such as plastics, metals and other obvious rubbish”.

121. Bettergrow pleads in para 143 of the 2FATCLS that the implied term for which it contends was to be implied because Online was not licensed to carry asbestos and Bettergrow was known by Online not to be licensed to receive asbestos. Alternatively, it contends that the term is to be implied as a matter of law.

122. Bettergrow does not explain how the term for which it contends is to be implied as a matter of law. The regulatory provisions on which it relies generally prohibit the disposal of waste containing asbestos other than at a site licensed to receive it. However, those provisions provide for criminal sanctions for breaches of the relevant obligations. They do not purport to imply terms into contracts of any type.

123. The principles by which courts imply terms in informal contracts such as the one between Online and Bettergrow were stated by the High Court in Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422; [1995] HCA 24 per Brennan CJ, Dawson and Toohey JJ, quoting Hawkins v Clayton (1988) 164 CLR 539 at 573, in these terms:

[W]here it is apparent that the parties have not attempted to spell out the full terms of their contract, a court should imply a term by reference to the imputed intention of the parties if, but only if, it can be seen that the implication of the particular term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case. That general statement of principle is subject to the qualification that a term may be implied in a contract by established mercantile usage or professional practice or by a past course of dealing between the parties.

124. It is difficult to see how the term for which Bettergrow contends meets these requirements. The term is an absolute one. It would be breached if Online delivered to Bettergrow’s facility drill mud which was contaminated with asbestos, whether Online knew of the contamination or not. The effect of the term is to place the whole risk of contamination on Online. That may be a sensible thing to do from Bettergrow’s point of view. However, it is difficult to see why it is necessary for the reasonable or effective operation of the contract. The contract itself sets out the circumstances in which Bettergrow was entitled to reject drill mud because it was contaminated. It is not necessary to imply a term to add to those circumstances.

Did Online breach any of the terms of the contract?

125. In my opinion, Online did not breach the express term of the contract pleaded by Bettergrow. Under that term, Bettergrow was entitled to reject drill mud containing contaminants such as “plastics, metals and other obvious rubbish”. The asbestos in this case does not fall within the description “other obvious rubbish”. It could not be detected with the naked eye. It could only be detected using tests that had to be carried out off-site. Plainly, then, the presence of asbestos was not obvious.

126. The implied term for which Bettergrow contends, if it was a term of the contract, was breached. It is not disputed that the drill mud was contaminated with asbestos.

An alternative implied term

127. During the course of final submissions, I raised the possibility that a term might be implied in the contract that Online would not knowingly deliver drill mud contaminated with asbestos to Bettergrow’s facility. Mr Newton, who appeared for Online, rightly pointed out that such a term had not been pleaded and that, although he could not immediately point to any prejudice if Bettergrow were permitted to rely on such a term, he was not in a position to concede that it would suffer no prejudice. Not surprisingly, Mr Weinberger, who appeared for Bettergrow, was happy to embrace such a term. The matter was left to be dealt with in this judgment.

128. I have concluded that Bettergrow should not be permitted to rely on such an implied term. The term would need to have been pleaded with some precision; and, in particular, it would have been necessary for Bettergrow to identify whether the term was concerned only with actual knowledge or whether it was also concerned with constructive knowledge. Moreover, because of the late stage at which the issue was raised, Online was not given a reasonable opportunity to address the question whether Bettergrow should be entitled to rely on the term or not.

129. In any event, I would not have found that the term had been breached. I have already concluded that neither Mr Maloney nor Mr Johnstone was told that the NDD may have involved disturbing asbestos.

130. In addition, I do not accept that Mr Catlin knew that the drill mud he delivered to Bettergrow was contaminated with asbestos. Mr Catlin and Mr Vial were told about the possibility that the area in which they were carrying out the NDD work was contaminated with asbestos and that they were required to put on protective clothing before commencing work, although they were permitted to remove that clothing not long after they put it on. Mr Catlin’s evidence, which I accept, is that others on the site, such as Mr Ryan Lindsay, did not wear protective clothing. Mr Catlin also gave evidence, which I accept, that they were told to wait before starting work in the second area while the soil was tested. It appears that the conclusion that Mr Catlin reached was that there was a risk that they might uncover asbestos. However, he did not see any and no one else told him that it had been found. Consequently, the view he formed was that the waste produced by the NDD work did not contain asbestos. There may be a question whether Mr Catlin acted reasonably in forming that view to which it will be necessary to return. However, even if he did not, that does not establish that he knew that asbestos was present in the waste delivered to Bettergrow.

131. It follows from the conclusions I have reached that the case based on contract must fail.

Did Online owe Bettergrow a duty of care?

132. Bettergrow pleads that Online owed the same duty of care as owed by TransGrid and Powercor – that is, a duty to exercise reasonable care to avoid causing Bettergrow harm by the illegal dumping of waste at Bettergrow’s facility.

133. In my opinion, there are at least two broad reasons why no such duty existed.

134. First, the allegation that Online owed Bettergrow a duty of care is, in substance, an allegation that a supplier who supplies goods (in this case, drill mud waste) to someone pursuant to a contract owes a duty of care to take reasonable steps to protect the person to whom the goods are supplied from economic loss arising from the fact that the goods are defective. However, no such duty exists generally and no explanation is given for why an exception should be made in this case.

135. The two features of this case on which Bettergrow places particular emphasis are that asbestos is hazardous and its disposal at Bettergrow’s facility was illegal. But it is difficult to see why either of those two features makes a difference to whether a duty of care should be imposed. Asbestos is hazardous because of the danger it poses to human health. However, there is no suggestion that that danger existed in this case; and that is not the risk of harm in respect of which Bettergrow sues. It is true that supply of the contaminated waste to Bettergrow was illegal. However, not all conduct that is illegal gives rise to a duty to take reasonable care not to engage in that conduct. Here, the relevant legislation puts in place a system of licensing and penalties to regulate the conduct. The conduct is regulated for the benefit of workers and their health and for the benefit of the environment, not for the benefit of individuals who might suffer economic loss from the conduct. Consequently, there is no reason to graft on to the legislation a common law duty of care.

136. Second, it is plain in this case that Bettergrow was not vulnerable to the conduct of Online. There was a contract between Bettergrow and Online that governed what could and could not be delivered to Bettergrow’s facility. It was open to Bettergrow to protect itself through the terms of that contract. In fact, that is what it has subsequently done. There is no reason in those circumstances to impose a duty of care on Online.

Was Online negligent?

137. Bettergrow pleads in para 139 of the 2FACTLS that Online breached its duty of care (a) by disposing of asbestos at Bettergrow’s facility, (b) by failing to enquire as to the presence of asbestos at the Beaconsfield West site, and (c) by failing to comply with regulations, the AMP and the CEMP. However, the first and third of these allegations are not, without more, allegations of negligence. They are, in essence, allegations of breach of an absolute obligation. The second allegation appears to be irrelevant since it seems to be accepted that Mr Catlin and Mr Vial were told of the presence of asbestos at the site.

138. Bettergrow’s real complaint appears to be that Mr Catlin and Mr Vial were negligent because they knew or ought to have known of the risk that the drill mud contained asbestos and, knowing of that risk, a reasonable person would have disposed of the mud at a facility licensed to take waste containing asbestos. I do not accept that contention.

139. It was negligent of Mr Catlin and Mr Vial not to have read the material that formed part of Powercor’s online training course and to have signed the SWMS and JSEA without reading them. However, it is doubtful that they would have learned anything more from reading them than what they learned from speaking to Mr Lindsay. The JSEA, but not the SWMS, stated that the work would involve disturbing asbestos. But taking the documents together and together with what else happened, it was reasonable for Mr Catlin and Mr Vial to form the view that there was a risk that asbestos was present, but that it was not certain. That conclusion in fact reflected the reality at the time.

140. There is a question whether Mr Catlin dealt with the risk appropriately. However, in answering that question, it is important to bear in mind that he was not sophisticated and had no particular training in asbestos. He was not told that there was a risk that the drill mud he and Mr Vial collected might contain asbestos. Nor was he told that the drill mud should be taken to a facility licensed to handle asbestos waste. It was not put to Mr Catlin that he understood the difference between friable and non-friable asbestos or that he appreciated that there was a risk that friable asbestos may have been present in the areas where the NDD work took place. Many of the answers he gave to questions asked of him in cross-examination suggest that he had only had experience with non-friable asbestos and that he thought that if asbestos was present, he would be able to see it. Nor was Mr Catlin cross-examined about what he understood was the purpose of the testing that was undertaken before work at the second location commenced and whether he appreciated that it was not possible to conduct a test for asbestos on-site. Taking those matters into account, I am not satisfied that Mr Catlin failed to take reasonable care in delivering the drill mud to Bettergrow.

137. Mr Vial was not called to give evidence. However, there is no suggestion that he was told something that Mr Catlin was not, or that he had training or knowledge that Mr Catlin did not or that he appreciated something that Mr Catlin did not. Powercor submitted that an issue in the case was whether Mr Lindsay instructed Mr Catlin and Mr Vial that the waste material had to go to a licensed asbestos facility and that, in accordance with the principles stated in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8, the Court can draw an adverse inference on that issue from the fact that Mr Vial was not called. However, the only evidence that supported the allegation that Mr Catlin and Mr Vial were given that instruction was the record of interview of Mr Lindsay by the EPA. I do not accept that evidence. As I have explained, Mr Lindsay did not give evidence and consequently was not available to be cross-examined on the evidence he gave to the EPA. The evidence is not supported by any other evidence and is inconsistent with the evidence given by Mr Catlin. Consequently, it was not necessary for Online to call Mr Vial to rebut what Mr Lindsay said to the EPA; and no adverse inference can be drawn from the fact that he was not called.

138. It follows that the case against Online must fail.

Other issues

143. Two issues remain. The first is the defence based on proportionate liability. The second is the defence of contributory negligence. Since I have concluded that none of the defendants is liable, neither defence arises. However, I should say something about them.

The apportionment defence

144. Section 35(1) of the CLA provides:

In any proceedings involving an apportionable claim:

(a)   the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant’s responsibility for the damage or loss, and

(b)   the court may give judgment against the defendant for not more than that amount.

145. “Apportionable claim” is defined in s 34(1) to include “a claim for economic loss or damage to property in an action for damages (whether in contract, tort or otherwise) arising from a failure to take reasonable care, but not including any claim arising out of personal injury”. “Concurrent wrongdoer” is defined in s 34(2) to mean “a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim”. Under s 34(4), it “does not matter that a concurrent wrongdoer is insolvent, is being wound up or has ceased to exist or died”.

146. It seems clear that the claims against each of the defendants are apportionable claims other than the (pleaded) claim in contract against Online. That claim does not arise from a failure to take reasonable care. If the claim had succeeded, it would have succeeded simply because the drill mud delivered to Bettergrow’s facility was contaminated with asbestos. The result is that Online would have had no defence to the claim in contract based on a concurrent wrongdoer defence.

147. On the other hand, if all of the other claims had succeeded, it would have been necessary to apportion responsibility for the loss between the defendants. That includes TTR, even though it is in liquidation. It also includes Online, since it was also sued in negligence.

148. There is, however, a practical difficulty in indicating how I would have apportioned responsibility between the defendants. In order to make that apportionment, it would be necessary to make assumptions about which defendants owed a duty of care, which defendants breached their duty of care and how in order to determine the question of apportionment. There are too many possible combinations to embark on that exercise. Consequently, I have not attempted it.

Contributory negligence

149. Section 5R of the CLA provides:

5R   Standard of contributory negligence

(1)   The principles that are applicable in determining whether a person has been negligent also apply in determining whether the person who suffered harm has been contributorily negligent in failing to take precautions against the risk of that harm.

(2)   For that purpose:

(a)   the standard of care required of the person who suffered harm is that of a reasonable person in the position of that person, and

(b)   the matter is to be determined on the basis of what that person knew or ought to have known at the time.

150. In the present case, TransGrid submits that Bettergrow failed to take reasonable precautions against the risk that asbestos contaminated material would be delivered to its facility. The precautions that it is said it should have taken include asking questions of Mr Catlin and Mr Vial about whether the loads they delivered were contaminated and where the loads came from. It is also said that Bettergrow should have conducted further testing before accepting the waste. Lastly, it is said that Bettergrow should have done more to make it clear that it was not licensed to receive waste containing asbestos and should have sought to protect itself contractually.

151. In determining whether a person is guilty of contributory negligence, it is not always appropriate to proceed on the basis that it is reasonable for a plaintiff to assume that a defendant has complied with its legal obligations. As Gleeson CJ, McHugh, Gummow and Hayne JJ explained in Astley v Austrust Ltd (1999) 197 CLR 1; [1999] HCA 6 at [30]:

In many cases, it may be proper for a plaintiff to rely on the defendant to perform its duty. But there is no absolute rule. The duties and responsibilities of the defendant are a variable factor in determining whether contributory negligence exists and, if so, to what degree. [Footnote omitted]

152. However, in the present case there was a detailed regulatory framework governing the removal and disposal of asbestos. Bettergrow had been in business for approximately 38 years and had not had any problems with asbestos previously. Online was not a new customer. It had delivered waste to Bettergrow’s facility for a number of years previously. In my opinion, it was not negligent in those circumstances for Bettergrow to proceed on the basis that Online would not knowingly deliver drill mud contaminated with asbestos to Bettergrow’s facility. Given that, it was not negligent for Bettergrow not to ask Online about the presence of asbestos in the loads that it delivered.

153. There remained, of course, a risk that unknown to Online, the waste was contaminated with asbestos. However, that risk had not eventuated in the past and there were no simple means by which to guard against it. In particular, there was no practical test that could be undertaken to determine whether friable asbestos was present in the drill mud. Bettergrow could have sought to protect itself contractually, but the fact that it did not does not mean that it was negligent. Even assuming that Bettergrow should have done more to make it clear that it was not licensed to receive waste containing asbestos, nothing follows from that fact. It is plain that Online would still have delivered the waste to Bettergrow because it did not believe that the waste contained asbestos.

154. For those reasons, had it been necessary, I would have concluded that the defence of contributory negligence should fail.

Online’s cross-claim

155. Having regard to the conclusions I have reached, little needs to be said about Online’s cross-claim. Bettergrow’s contractual claim against Online has failed. Consequently Online’s cross-claim, had it been permitted, would have been dismissed. It is not necessary, therefore, to explain in detail why I did not permit that cross-claim. It is sufficient to say that I concluded at the time that TransGrid and Powercor may well have made different forensic decisions had the cross-claim been filed before the hearing commenced, with the result that they would have suffered irremediable prejudice if I had permitted the cross-claim to be filed during the course of the trial.

Orders

156. The orders of the court are:

1. The proceedings be dismissed;

2. The plaintiff pay the costs of the first, second and fourth defendants;

3. The first cross-claim cross-summons filed by the second defendant on 17 February 2017 be dismissed;

4. The second cross-claim cross-summons filed by the first defendant on 20 February 2017 be dismissed;

5. There be no order for costs in relation to the cross-claims;

6. The parties have liberty to apply to vary orders (2) and (5) within 14 days of the date of this judgment.

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Decision last updated: 26 April 2018